Compensatory Afforestation Fund Act 2016

Also called: CAMPA · Topic: Natural Vegetation and Forests of India · NCERT: Beyond NCERT

Meaning

The Compensatory Afforestation Fund Act 2016 (CAF Act) is a law that sets up a National Compensatory Afforestation Fund and State Compensatory Afforestation Funds. These funds hold the money that project builders pay when forest land is used for non-forest work. The money pays for compensatory afforestation (planting new forest somewhere else) and the net present value (NPV) of the lost forest. National CAMPA and State CAMPAs manage the funds. The law matters because it turned a temporary court-made fund into a proper legal system. That system has handed out very large sums for forests. Even so, critics say a new plantation cannot really replace a natural forest.

Explanation

Why the Act was needed (cause)

• Forest (Conservation) Act 1980:
• Forest land can be used for any non-forest purpose only with prior approval of the Central Government. Non-forest purposes include mining, dams, roads and industry.

• When approval is given, the project builder must pay to make up for the lost forest.

• Godavarman case (filed 1995):

• The Supreme Court kept this case open for years as a continuing mandamus. A mandamus is a court order telling a government to do its duty. In a continuing mandamus, the court keeps giving new orders over the years.

• Through this case, CAMPA began as an ad-hoc (temporary) body that held the money paid for diverted forest land.

• Result: a large amount of money built up with the ad-hoc CAMPA. A law was needed to manage and spend it properly. The CAF Act 2016 was that law.

What the user agency pays (parts)

• User agency: the project builder that takes forest land.
• Compensatory afforestation cost: money to plant new forest somewhere else.
• Net present value (NPV): the money value of the services a forest gives. These services include clean water, carbon storage, soil protection and biodiversity (the variety of living things). The user agency also pays the NPV of the land it takes.
• Purpose of the Act: to manage money collected for compensatory afforestation and NPV when forest land is diverted under the Forest (Conservation) Act 1980 [3].

How the money flows (process → result)

• Step 1: Payment. All payments go into the National Compensatory Afforestation Fund and the State Compensatory Afforestation Funds.
• Step 2: Split.
• 90 per cent goes to the states.

• 10 per cent stays with the Centre.

• Step 3: Management. The National CAMPA manages the national fund. State CAMPAs manage the state funds.

• Step 4: Transfer of old money.
• The CAF Rules were notified, and the Supreme Court approved them on 28 January 2019.
• After that, ₹54,685 crore held by the ad-hoc CAMPA came under the Government of India [2].

• Of this, ₹47,436 crore went to 27 States/UTs that had opened accounts [2].

• Step 5: Later results.

• ₹48,606.39 crore has been given from the National Fund to 32 State Funds [3].
• More than 3.20 lakh ha of compensatory afforestation was done between 2020-21 and 2024-25 [3].

Weak points (criticism)

• Poor land and poor plantations:
• New plantations are often on non-forest or poor land.
• Many are single-species plantations (monoculture: planting only one tree species).

• So they cannot replace a natural forest with its full biodiversity.

• Use of funds: the money is sometimes misused or left unspent. For example, it may go on buildings or vehicles instead of forests.

Where it occurs

• Where it operates: all over India. It applies wherever forest land is diverted for non-forest work under the Forest (Conservation) Act 1980 [3].
• Who runs it:
• National CAMPA runs the National Compensatory Afforestation Fund (the 10 per cent share).

• State CAMPAs run the State Compensatory Afforestation Funds (the 90 per cent share).

• Year: the Act was passed in 2016. The Supreme Court approved the CAF Rules on 28 January 2019, and money was then transferred to the states [2].

• Reach: money from the National Fund has gone to 32 State Funds [3].
• Court roots: the fund began as an ad-hoc body through the T.N. Godavarman Thirumulpad v. Union of India case. That case began over illegal tree felling in the Nilgiris (Tamil Nadu).

Don't confuse with

• Forest (Conservation) Act 1980: this Act decides whether forest land can be diverted, and only with prior Central approval. The CAF Act 2016 only manages the money paid after a diversion is approved.
• Ad-hoc CAMPA: this was a temporary body created through the Godavarman case in the Supreme Court. National and State CAMPAs are statutory bodies, meaning they were set up by the 2016 law.
• Forest Rights Act 2006: it gives forest rights to people (Scheduled Tribes and other traditional forest dwellers), and the nodal ministry is Tribal Affairs. The CAF Act deals with money for planting forests, not with people's rights.
• Compensatory afforestation and NPV: compensatory afforestation pays for planting new trees. NPV pays for the value of the services the lost forest gave. The user agency pays both.

Prelims Hooks

• CAF Act 2016: 90 per cent of the money goes to State Funds and 10 per cent to the National Fund. Trap: it is not 50:50, and the larger share does not stay with the Centre.
• The Act covers money for compensatory afforestation and NPV collected when forest land is diverted under the Forest (Conservation) Act 1980 [3].
• CAMPA stands for Compensatory Afforestation Fund Management and Planning Authority. It first came up as an ad-hoc body through the Godavarman case.
• 28 January 2019: after the CAF Rules were notified and approved by the Supreme Court, ₹54,685 crore came under the Government of India, and ₹47,436 crore went to 27 States/UTs [2].
• Latest transfer: ₹48,606.39 crore from the National Fund to 32 State Funds [3].
• More than 3.20 lakh ha of compensatory afforestation was done between 2020-21 and 2024-25 [3].

Mains Points

• Compensatory afforestation is not real compensation (GS-III, environment):
• CAMPA has moved large sums, about ₹48,606 crore to 32 State Funds [3].
• But a new plantation cannot replace a natural forest with its full biodiversity.

• Plantations on poor or non-forest land and monoculture make the gap worse.

• Problems with how the funds are used (GS-III, governance of resources):

• Money is sometimes left unspent or misused on buildings and vehicles.
• Better ways to choose land, mixed native species and proper checks on spending would make the funds work.

• This would also help close the gap between India's 25.17 per cent forest and tree cover (ISFR 2023) [1] and the 33 per cent goal of the National Forest Policy.

• Conservation against development (GS-III):

• Under the Forest (Conservation) Act 1980, development projects can take forest land only with Central approval. The CAF Act puts a price on that loss through compensatory afforestation and NPV.
• The 2023 Amendment makes it easier to divert forest land for border and security projects. So more cases will depend on CAMPA-funded compensatory afforestation.
• That makes fixing how the funds are used even more urgent.

Related concepts

• National Forest Policy 1952
• National Forest Policy 1988
• TN Godavarman Thirumulpad case
• Forest (Conservation) Amendment Act 2023
• Forest Rights Act 2006

Read more

• Forest policy and forest law since Independence